Neobroker Lightyear to launch ISAs in challenge to Hargreaves Lansdown
Neobroker Lightyear has received approval from the City regulator to launch as a fully-fledged investment firm in the UK amid intensifying competition in the sector.
The investment platform, founded in 2020 by two early Wise employees, is planning to roll out Individual Savings Accounts (ISA) by the end of this tax year after the Financial Conduct Authority (FCA) granted it direct authorisation.
The approval allows the start-up to offer new products in its home market, where it originally launched in 2021 and will relaunch in Janaury under the company Lightyear UK.
The firm said it had made new hires at its London headquarters to support the expansion. Chief operating officer Wander Rutgers, who formerly headed up rival Robinhood UK, will become Lightyear’s first UK chief executive.
“This is the start of our journey to becoming the best investing platform for the UK market,” Rutgers told City PM.
“We now have no blockers in our way, and we’re ready to help everyone here put their hard-earned cash to work, and invest in their futures.”
When it relaunches, all of Lightyear’s retail and business customers in the UK will become eligible for deposit protection up to £85,000 through the Financial Services Compensation Scheme.
Lightyear has positioned itself as a disruptor to dominant brokers in the UK, such as Hargreaves Lansdown, AJ Bell and Vanguard.
“We’re targeting the same customers that use platforms like Hargreaves Lansdown, but the key difference is that we’re not charging massive fees or making it really clunky,” Rutgers said.
Other challengers have also pushed for market share, including Freetrade, Trading 212 and Revolut, which last week announced it had secured FCA approval as an investment firm to offer trading of UK and EU-listed stocks from next year.
“Just a tiny proportion of the market use fintechs, but the ones that are here have lots of caveats and fees,” Rutgers added.
“And if they don’t, they’re cross-subsiding with risky gambling-like products”, he argued, citing contracts for difference.
Lightyear gives investors access to UK, EU and US stocks, as well as exchange-traded funds. In May, it launched a “Vaults” product for customers to hold cash in money market funds managed by BlackRock and receive monthly interest payments.
Its ISA plans come as the new government considers reform of the model for tax-free savings after promising to simplify the regime and boost investment in Britain’s capital markets.
Chancellor Rachel Reeves confirmed in last month’s Budget that she would scrap Conservative plans for a British ISA, which would have allowed savers to invest an extra £5,000 tax-free in UK equities on top of the existing £20,000 allowance.
Lightyear is also live in 22 European countries and regulated across the EU by Estonia’s financial supervisor.
“Unlike others who’ve tried to enter the UK with no experience, we’ve been live here since the start, so we’ve had years of experience in the UK, combined with years of experience building a ‘global-local’ tailored product in each of our other 21 markets,” Rutgers said.